What is GST? Are you confused? This Shadows of Life post will explain everything you need to know about GST.
GST stands from Goods and Service Tax; the unique selling proposition of GST is that it will merge many of Indirect tax system prevailing in India in to one consolidated tax system.
What will get Cheaper?
For manufactured consumer goods, the current tax regime means the consumer pays approximately 25-26% more than the cost of production due to excise duty and value added tax. With the GST rate expected at 18%, most goods are expected to become cheaper.
What will be Costlier?
The effective service tax rate at present is 15% and it applies to almost all services other than essential ones such as ambulance services, cultural activities, certain pilgrimages and sports events. If GST is implemented, this rate will increase to 18% making services more expensive. Consequently, eating out, staying at hotels and air travel will turn costlier. Similarly, insurance premiums and investment management which attract a service tax currently, will also become costlier with the higher rate of GST.
Why do we need GST in India?
First, the GST will greatly increase the revenues available at the states’ and centre’s disposal by expanding the tax base. More importantly, the resources of the poorer states (or consumer states) like, Uttar Pradesh, Bihar and Madhya Pradesh will increase substantially.
Second, the GST will facilitate ‘Make in India’ by converting the geographical landscape of the country into a single market. Despite being one country, India is a union of 30 or more markets. Too many taxes in the current system like the Central Sales Tax (CST) on inter-state sales of goods; numerous intra-state taxes; and the extensive nature of countervailing duty exemptions, favour imports over domestic production. GST would get rid of the CST and subsume most of the other taxes. And since, it will also be applicable on imports, the major tax factor working against ‘making in India’ will disappear, greatly boosting the production and in turn exports. This will ultimately help bridge the current account deficit.
Third, the GST would improve tax governance in two ways. One, like the value added tax (VAT), it is a self-collecting and self-enforcing tax. What it essentially means it that the companies buying supplies from outside parties will insist on tax payment on goods supplied as without this they can’t get setoffs on their own final product sales. Two, due to the dual monitoring structure of the GST – one by the states and another by the Centre – it is difficult to evade tax. Even if one set of tax authorities overlooks or fails to detect evasion, there is the possibility that the other overseeing authority may not.
We have attached a video to explain the concept in a visual form.
Leo Rahul Narula,
Member Of Leo Club Of Juhu.
Do you ever think that energy sources can end up in the future? Do you know what we will do if one day our energy sources run out? Do you know that one day we will be able to generate free energy through our renewable energy systems when we have no more energy sources? This is possible thanks to the renewable energy systems that are now widely used by many countries. Also, when we use renewable energy systems, we protect both our energy sources and the environment.
Today, the world's biggest problem is the unconscious use of classical energy sources and the consumption of these resources as a result of increasing energy needs. Examples of classical energy sources are oil, coal and natural gas. Even if not now, it will become almost impossible to find and use these resources in the next few centuries. That is why we should focus on renewable energy sources rather than classical energy sources. Well, what are these renewable energy sources and how are they used? Renewable energy is an energy source that can be obtained from natural sources and can be fortified permanently by nature. Examples of these sources are solar energy, wind energy, wave energy, geothermal energy, hydrolic energy and biomass energy. The most used renewable energy in the world is hydraulic energy. Nearly 15% of the world's energy needs are supplied by hydraulic energy. Hydraulic energy is the power that can be used for a useful purpose, obtained from the energy of water that falls or flows fast. Another very common source of renewable energy is wind energy. The air change on the sun's surface causes the air to warm up by acting on the atmosphere, causing the warming mass to expand and move up in motion. This rising air mass moves vertically and horizontally before it can go out of the atmosphere, and at this point the wind is formed by the warming of the air and its massive displacement. The kinetic energy that this wind has generated has been used in windmills and sailboats for thousands of years, thanks to the wind turbines, electricity is being generated from this energy. With wind energy, 3.5% of the world's energy is obtained. I hope this rate will rise in the future. Another type of renewable energy that is widely used in our lives is solar energy. Solar energy is the source of heat, which is the sun and bright light. Solar energy can be seen around most major traffic lights, homes, lighting, water heating, mobile phone chargers, calculators, and many other places. Solar energy has accepted itself as an environmentally clean renewable energy source and its use is increasing day by day. Many countries in the world are encouraged to use 100% renewable energy for electricity and transportation, or even as a primary energy source. Using renewable energy is motivated by incentives, global warming and other ecological and economic concerns because thanks to renewable energy systems, we protect our environment, our earth, animals, children and future generations from many important hazards. In many countries, we can see important information and statistics on renewable energy sources. For example, Denmark produced 140% of its electricity needs at a high level in 2015 on an unusually windy day and exported significant quantities to Germany, Sweden and Norway. In another example, Portugal produced zero emissions for 4 days using energy generated only in sun, wind and hydroelectric power plants between 7-11 May 2016. By looking at these examples, we can easily understand that in the future we can provide all of our energy needs from renewable energy sources.
As a result, using renewable energy systems is extremely important both in terms of global warming, ecological and economic aspects of the world. While we still have more time, let's go to renewable energy systems and pay attention to unconscious energy use. Let's turn off unnecessary lights and put our world under our protection…
Leo Öztürk Peker
Past-President of Omega Group of Agora Leo Club, Turkey (118-R)